During an election night fraught with surprises, one thing became clear: hundreds of thousands of Arizona employees will get a raise on January 1, 2017. Also, private sector employees in Arizona will have a right to accrue paid sick leave beginning July 1, 2017. Proposition 206, dubbed the “Fair Wages and Healthy Families Act,” passed by a wide margin, altering the landscape of benefits available to Arizona employees.

Minimum Wage

Under the Act^[1], Arizona’s minimum wage of $8.05 per hour will increase annually as follows:

• $10.00 per hour on January 1, 2017.
• $10.50 per hour on January 1, 2018.
• $11.00 per hour on January 1, 2019.
• $12.00 per hour on January 1, 2020.
• Starting January 1, 2021, the minimum wage will increase annually based on cost of living, as measured by the consumer price index.

Employees who receive tip income can continue to earn $3.00 per hour less than the minimum wage if their employer can prove the employee is earning at or more than the minimum wage when tips are counted.

The Act also imposes new notice and recordkeeping requirements making employers, for example, post notice of employees’ rights under the Act^[2] and keep payroll records for four years.

Local ordinances may provide a higher minimum wage, an outcome which has already come to fruition. For example, Flagstaff voters approved Proposition 414, which raises the minimum wage in Flagstaff to $12.00 per hour starting in July 2017, and rising to $15.00 incrementally by 2021. Thereafter, the minimum wage in the City of Flagstaff would increase by the cost of living, and remain at “not less than” the prescribed levels or $2.00 above Arizona’s minimum wage.

Paid Sick Leave

Beginning July 1, 2017, Arizona employers with fewer than 15 employees must provide all employees with one hour of paid sick leave for every 30 hours worked, up to 24 hours a year. Employers with 15 or more employees must provide one hour of paid sick leave for every 30 hours worked, up to 40 hours a year. Exempt employees will generally be assumed to work 40 hours per week for purposes of paid sick leave accrual.

The Act details the reasons employees may use paid sick leave, which includes, but is not limited to, the employee’s own physical or mental illness, to care for the employee’s family member who has a physical or mental illness, a public health emergency, to ameliorate the effects of domestic violence, sexual violence or stalking of the employee or employee’s family member, and a variety of other circumstances.

The Act also makes clear that:

1. Employers are required to post a notice in the workplace that outlines employees’ right to paid sick leave and their protections under the Act.
2. Employers must itemize on employees’ paychecks the amount of paid sick leave available to the employee, the amount of sick leave taken by the employee in the year to date, and the amount of pay the employee has received as paid sick time, if any.
3. Employees may carry over earned sick leave to the following year, subject to the limitations on usage and accrual. Employers can avoid the rollover, but only if the employer pays out the earned sick leave at the end of the year and grants the full allotment of sick leave for the following year.
4. Employers may request numerous types of documentation from employees to demonstrate they are entitled to paid sick leave, such as a doctor’s note, a signed statement from the employee, or even a protective order, but employers cannot require that employees disclose the details about the health condition of the employee or family member, or the details of the domestic violence, sexual violence, abuse or stalking.
5. Employers must permit employees to use paid sick leave in the smaller of hourly increments or the smallest increment that their payroll system uses to account for absences or other time.
6. Employers cannot require employees, as a condition of using paid sick leave, to find a replacement worker.
7. Employers cannot count the use of paid sick leave as an absence that leads to discipline or termination.
8. Employers cannot retaliate against employees for using or seeking to use paid sick leave.
9. Employers do not need to pay out the paid sick leave upon termination of employment, but if the same employee is rehired within nine months of termination, the accrued, unused sick leave needs to be reinstated and the employee can use that balance immediately upon rehire.
10. Employers are required to keep payroll records showing compliance with the Act for four years, which is longer than some employers keep payroll records.
11. Employers’ existing paid leave policy, such as a general PTO policy, may be acceptable to satisfy the paid sick leave requirements under the Act, if the paid leave policy provides the same amount and accrual under the Act and is available for the employee to use under the same circumstances as described in the Act.
12. The Act’s requirements do not apply to employees covered by a collective bargaining agreement, to the extent that such requirements are expressly waived in the CBA in clear and unambiguous terms.
13. The Act provides for specific civil penalties and damages, including attorneys’ fees, if an employer violates the Act, or otherwise discriminates, retaliates, or interferes with an employee’s rights under the Act.

Recreational Marijuana Not Approved

Arizona voters did not pass Proposition 205, which sought to legalize recreational marijuana. Proposition 205 proposed to permit individuals 21 years and older to privately use and possess, up to one ounce of marijuana, and would have levied a 15 percent tax on all marijuana and marijuana products.

Arizona’s existing marijuana law remains, which prohibits individuals from using, possessing, growing or purchasing marijuana unless the individual is authorized by and doing so in compliance with the Arizona Medical Marijuana Act. Marijuana use under any circumstances is still prohibited under federal law.

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Notes:

^[1] The full text of the Fair Wages and Healthy Families Act (“Act”) is available at http://apps.azsos.gov/election/2016/general/ballotmeasuretext/I-24-2016.pdf

^[2] A model notice compliant with the Act is forthcoming from the Industrial Commission of Arizona.